The April U.S. durables report
The April U.S. durables report undershot estimates due to April weakness for the equipment figures alongside the expected transportation drop, and big downward March revisions for the equipment, orders and shipments data. the durable goods report raised red flags for the business fixed investment outlook even before a likely hit from the May escalation in trade tensions. Analysts saw a -2.1% April orders drop with a flat ex-transportation figure thanks to a Boeing orders drop to just 4 planes, and a pull-back in the vehicle assembly rate to an 11-month low of 10.6 M. Boeing also contributed to a -1.6% shipments plunge, though inventories rose by only 0.4% despite an expected lift from Boeing. Analysts still expect only a small Q1 GDP growth trimming to 2.9% from 3.2% thanks to a boost in March inventories, but analysts lowered our Q2 GDP estimate to 1.6% from 1.8%. Our Q2 estimate now assumes a flat (was 3.4%) growth figure for "real" equipment spending after an estimated -0.1% (was 0.2%) Q1 pace. Analysts expect a -$41 (was -$43) B inventory subtraction in the Q2 GDP report that takes the accumulation rate down to the still-lofty $80 B area from an elevated $121.4 (was $128.4) B in Q1. Analysts now expect a 0.5% April factory inventory rise, a 0.4% business inventory increase, and a -1.3% factory orders figure.